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Why Is eBay Inc(EBAY) Up 5.9% Since the Last Earnings Report?
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A month has gone by since the last earnings report for eBay Inc. (EBAY - Free Report) . Shares have added about 5.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
eBay Inc. fourth-quarter 2016 revenues were up sequentially and year over year. Shares jumped more than 8% in extended trading on Wednesday.
Earnings were 44 cents per share missed the Zacks Consensus Estimate of 47 cents per share. Adjusted earnings per share exclude one-time items but include stock-based compensation expense.
Revenues
Revenues were $2.39 billion compared with the consensus mark of $2.40 billion. For the full year 2016, eBay’s revenues were $8.98 billion, a 4.5% increase over revenues of $8.59 billion reported for full year 2015.
Revenue was up 3.1% on a year-over-year basis (up 6% on an Fx-neutral basis). In the fourth quarter, the Marketplace platform contributed $21.1 billion of gross merchandise volume (GMV) and $1.9 billion of revenues. On the other hand, StubHub also showed signs of accelerated growth with contribution of $ 1.2 billion of GMV, up 5% on a year-over-year basis, and revenues of $0.28 billion, up 20% on a year- over-year basis.
Classifieds platforms also performed well with contribution of $0.2 billion of revenues, up 13% year-over-year on an FX-Neutral basis.
Gross Merchandise Volume grew 5% year over year on an Fx-neutral basis. Active buyers/customers totaled 167 million, up 3% from the year-ago quarter. For the full year, GMV grew 5% on an Fx-neutral basis.
Margins and Income
Pro-forma gross margin for the quarter was 77.83%, down 115 basis points (bps) year over year and 2 bps sequentially.
Cost of revenues increased 9.3% on a year-over-year basis primarily due to the addition of PayPal processing costs and the impact of foreign exchange.
Adjusted operating expenses of $1.21 billion increased 8.7% from the prior-year quarter and 3.6% sequentially. Operating margin shrank 374 bps year over year but was up 218 bps sequentially to 27.3%.
Excluding the impact of intangibles amortization and other items on a tax-adjusted basis, pro-forma net income came in at $491 million compared with $720 million in the year-ago period.
Including the special items, GAAP net income was $5.95 billion ($5.3 per share) compared with $523 million (39 cents per share) in the year-ago quarter.
Balance Sheet and Cash Flow
eBay’s balance sheet is highly leveraged, with total debt of $9 billion eclipsing the cash and short-term investments balance of $7.1 billion. The company generated $620 million in cash from continuing operations and spent $136 million on capex. Share repurchases totaled $841 million.
Outlook
For the first quarter of 2016, eBay expects revenues to grow 4%–6% on an Fx-neutral basis to $2.17 billion – $2.21 billion. Non-GAAP earnings are expected within 46 cents–48 cents.
GAAP earnings per share from continuing operations are expected in the range of 25 cents - $40 cents.
In 2017, eBay expects revenues to grow 6 on an Fx-neutral basis to $9.3 billion – $9.5 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
At this time, eBay Inc.'s stock has a poor Growth Score of 'F', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.
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Why Is eBay Inc(EBAY) Up 5.9% Since the Last Earnings Report?
A month has gone by since the last earnings report for eBay Inc. (EBAY - Free Report) . Shares have added about 5.9% in that time frame, outperforming the market.
Will the recent positive trend continue leading up to the stock's next earnings release, or is it due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
eBay Q4 Earnings Lag, Holiday Sales Drive Revenues
eBay Inc. fourth-quarter 2016 revenues were up sequentially and year over year. Shares jumped more than 8% in extended trading on Wednesday.
Earnings were 44 cents per share missed the Zacks Consensus Estimate of 47 cents per share. Adjusted earnings per share exclude one-time items but include stock-based compensation expense.
Revenues
Revenues were $2.39 billion compared with the consensus mark of $2.40 billion. For the full year 2016, eBay’s revenues were $8.98 billion, a 4.5% increase over revenues of $8.59 billion reported for full year 2015.
Revenue was up 3.1% on a year-over-year basis (up 6% on an Fx-neutral basis). In the fourth quarter, the Marketplace platform contributed $21.1 billion of gross merchandise volume (GMV) and $1.9 billion of revenues. On the other hand, StubHub also showed signs of accelerated growth with contribution of $ 1.2 billion of GMV, up 5% on a year-over-year basis, and revenues of $0.28 billion, up 20% on a year- over-year basis.
Classifieds platforms also performed well with contribution of $0.2 billion of revenues, up 13% year-over-year on an FX-Neutral basis.
Gross Merchandise Volume grew 5% year over year on an Fx-neutral basis. Active buyers/customers totaled 167 million, up 3% from the year-ago quarter. For the full year, GMV grew 5% on an Fx-neutral basis.
Margins and Income
Pro-forma gross margin for the quarter was 77.83%, down 115 basis points (bps) year over year and 2 bps sequentially.
Cost of revenues increased 9.3% on a year-over-year basis primarily due to the addition of PayPal processing costs and the impact of foreign exchange.
Adjusted operating expenses of $1.21 billion increased 8.7% from the prior-year quarter and 3.6% sequentially. Operating margin shrank 374 bps year over year but was up 218 bps sequentially to 27.3%.
Excluding the impact of intangibles amortization and other items on a tax-adjusted basis, pro-forma net income came in at $491 million compared with $720 million in the year-ago period.
Including the special items, GAAP net income was $5.95 billion ($5.3 per share) compared with $523 million (39 cents per share) in the year-ago quarter.
Balance Sheet and Cash Flow
eBay’s balance sheet is highly leveraged, with total debt of $9 billion eclipsing the cash and short-term investments balance of $7.1 billion. The company generated $620 million in cash from continuing operations and spent $136 million on capex. Share repurchases totaled $841 million.
Outlook
For the first quarter of 2016, eBay expects revenues to grow 4%–6% on an Fx-neutral basis to $2.17 billion – $2.21 billion. Non-GAAP earnings are expected within 46 cents–48 cents.
GAAP earnings per share from continuing operations are expected in the range of 25 cents - $40 cents.
In 2017, eBay expects revenues to grow 6 on an Fx-neutral basis to $9.3 billion – $9.5 billion.
How Have Estimates Been Moving Since Then?
Analysts were quiet during the last one month period as none of them issued any earnings estimate revisions.
eBay Inc. Price and Consensus
eBay Inc. Price and Consensus | eBay Inc. Quote
VGM Scores
At this time, eBay Inc.'s stock has a poor Growth Score of 'F', a grade with the same score on the momentum front. However, the stock was allocated a grade of 'B' on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'D'. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for value based on our styles scores.
Outlook
The stock has a Zacks Rank #3 (Hold). We are looking for an inline return from the stock in the next few months.